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The U.K. Royal Mint is reporting increased demand for gold coins among Greek investors as political and economic turmoil in the country has many seeking a safe haven. Bloomberg also reports that the gold spot price in euros has risen 12% this year.
“There has been a noticeable increase in demand in this last quarter” Lisa Elward head of bullion sales at the Royal Mint told Bloomberg. “We tend to see an upsurge in sales at times of political and financial uncertainty.”
As we wrote of last week uncertainty surrounding Greece and the European economy helped gold rise 8% in January – its biggest monthly gain in three years.
Gold received a boost on Monday after Greece’s new Prime Minister Alexis Tsipras kicked off three days of debates centered around his government’s policy plans. According to the Wall Street Journal:
“Greek officials on Monday refused to accept an extension of the country’s international bailout a day after saying the country would seek a short-term loan until June rather than continue with the aid program demanded by its European partners. The move heightened concerns that Greece would either default on its debt or exit the eurozone and that raised demand for gold. Some investors buy gold during times of political or economic uncertainty believing it will hold its value better than other assets.”[emphasis added]
The media is calling Greece’s hypothetical exit from the euro a “Grexit”. The possibility has raised concerns about potential losses in stocks bonds and currency values in Greece and the Eurozone that could result from such a move. :
“The one thing everyone knows about gold is it is a good thing to hold if your currency is about to devalue [emphasis added]. It would be understandable for Greeks to buy gold because they are afraid of losing their money” Matthew Turner analyst at Macquarie Bank Ltd. told Bloomberg.“During periods of monetary uncertainty people will always think gold is a useful addition to their portfolios.” [emphasis added]
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